This study aims to determine the impact of unemployment and inflation on Oman’s economic growth. The research design is quantitative, as it involves the analysis and evaluation of secondar data concerning the unemployment rate, inflation and economic growth from 1991 to 2022. The study reveals a non-significant relationship between unemployment (UNEMP) and GDP growth, suggesting caution in drawing strong conclusions due to unaccounted labor market factors. Conversely, inflation exhibits a statistically significant positive impact on GDP growth. However, the constant term lacks significance, potentially due to sample size constraints or unmodeled factors. Further exploration via Vector Error Correction Model (VECM) analysis indicates limited explanatory power of the GDP growth equation, while Inflation and Unemployment equations demonstrate significant relationships, suggesting their short-term influence. Granger causality tests reveal intriguing causal relationships with economic growth, predicting unemployment and inflation rates. The study concludes with some recommendations for the policy makers.

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Understanding the Impact of Unemployment and Inflation on Oman’s Economic Growth

  • Nasser Al Harrasi,
  • Maha Al Jahwari,
  • Jouhara Al Habsi,
  • Maria Al Jabri

摘要

This study aims to determine the impact of unemployment and inflation on Oman’s economic growth. The research design is quantitative, as it involves the analysis and evaluation of secondar data concerning the unemployment rate, inflation and economic growth from 1991 to 2022. The study reveals a non-significant relationship between unemployment (UNEMP) and GDP growth, suggesting caution in drawing strong conclusions due to unaccounted labor market factors. Conversely, inflation exhibits a statistically significant positive impact on GDP growth. However, the constant term lacks significance, potentially due to sample size constraints or unmodeled factors. Further exploration via Vector Error Correction Model (VECM) analysis indicates limited explanatory power of the GDP growth equation, while Inflation and Unemployment equations demonstrate significant relationships, suggesting their short-term influence. Granger causality tests reveal intriguing causal relationships with economic growth, predicting unemployment and inflation rates. The study concludes with some recommendations for the policy makers.